Key Equity Release has urged the Government to take a more joined-up approach to retirement planning, saying that property wealth should be considered alongside pensions and later-life care funding.
The forthcoming Budget presents an opportunity to take a more holistic approach to retirement funding, according to Key Equity Release, which is calling for property wealth to play a greater role in financial planning.
The later-life lending specialist said policy discussions around pensions, inheritance tax, stamp duty and care funding should be viewed as interconnected rather than as separate issues.
The call comes amid wider debate around retirement adequacy, with research from the Pensions Commission suggesting that 15 million working-age adults are not on course to achieve the retirement incomes they aspire to.
Key argues that housing wealth could form a larger part of retirement planning, citing recent comments from the FCA that highlighted later-life lending as a potential fourth pillar of retirement funding alongside the State Pension, workplace pensions and personal pensions.
Among its proposals, the firm suggests exploring earlier access to pension savings to support first-time home ownership, which it says could help younger workers build property wealth over the long term.
The firm also believes any future measures designed to raise revenue from the property market should be accompanied by public awareness campaigns focused on the role housing wealth can play in retirement planning.
In addition, Key has called for changes to stamp duty to reduce barriers to downsizing and for tax incentives to encourage older homeowners to use housing wealth to help meet care costs in later life.
Will Hale, CEO of Key Equity Release, said: “Government policy around funding retirement needs to be more holistic and joined up and the Budget is an opportunity to start that process.
“However, it is not just about the Budget but about the whole policy approach to retirement funding which needs to better recognise the interconnectivity between pension reforms, IHT and property taxes.”
Hale said policy relating to pensions, inheritance tax and the housing market should be considered collectively when addressing retirement funding challenges.
“Policies around saving for retirement and how pension assets can be accessed as well as IHT and initiatives to ensure a well-functioning property market should not be looked at in isolation but as part of a bigger picture with home ownership and property wealth playing a central role in addressing societal challenges and enabling individuals to live a more comfortable later life.”
He added: “A holistic approach will help older homeowners as well as younger workers saving for retirement cope with the cost-of-living pressures they are facing here and now while also allowing them to create an asset which down the line can be used to fund later life.”
Hale also referenced the FCA’s comments on later-life lending, saying: “The FCA has made a major start by highlighting later life lending’s potential to become the fourth pillar of funding retirement alongside state, personal and workplace pensions, but the Government can use this Budget to create a coherent framework of policies that elevate the importance of property within an holistic approach to helping individuals and society navigate the financial challenges of today as well as the pressures created by increased longevity and inadequate savings.”
Main image: house, home, buildings, mortgage, ierra-mallorca-JXI2Ap8dTNc-unsplash
